Collaboration on Electric Cars
Two young leaders in the Korean business world, Chung Eui-sun, vice chairman of Hyundai Motor, and Koo Kwang-mo, chairman of the LG Group, banded together for a future car alliance.
According to the automobile and electronics industries on August 15, collaboration between the Hyundai Motor Group, the largest carmaker in Korea, and the LG Group, which is fostering the automotive electronic device business as its future growth engine, is expanding. This move is expected to have bigger momentum as generational changes at these groups are on the horizon.
Chung and Koo have something in common –- they are in their 40s. Chung was born in 1970 and is considered one of young leaders in Korean business circles. Koo, the eldest son of former chairman Koo Bon-moo, was born in 1978 and turned 40 this year.
Their collaboration has been generating various synergies. The Hyundai Motor Group is a representative carmaker of Korea. The LG Group is already well recognized in the electronic device business to such an extent that global companies such as Volkswagen Group wanted to work with the LG Group. By means of the collaboration, the Hyundai Motor Group can prepare for future car production better and the LG Group can secure a stable buyer.
In particular, the LG Group has affiliates that can produce automobile materials and batteries for green cars. In fact, LG Chem's batteries were loaded into Hyundai's first eco-friendly model, the Ioniq. Prior to this, LG Chem's batteries were applied to Hyundai Motor’s hybrid cars. This means that collaboration between the two companies began after the development of an environment-friendly car. As the electric car business become more active in the future, collaboration between the two sides will be further strengthened. In addition, LG Hausys is jointly developing carbon fiber reinforced plastic (CFRP) for automobiles with Hyundai. LG Display also supplied LCD panels for some models of Kia Motors.
This collaboration is being fueled by urgency that no company can cope with a changing industrial ecosystem with one single business, industry experts say. "Hyundai Motor should understand information and communication technology (ICT) better than ICT companies," vice chairman Chung said at the Consumer Electronics Show (CES) held earlier this year. This explains why the Hyundai Motor Group well-known as a carmaker, is strengthening the capabilities of Hyundai Mobis.
LG also made an early foray into the market of electronic devices for automobiles after designating them as a new future growth engine item. In 2013, LG integrated the existing automobile related business divisions into the VC Business Division in charge of the auto electronic parts and device business. Although the division is still recording a deficit, the market is steadily growing, showing the growth potential of the division. Its order backlog, which was 10 trillion won at the time of the establishment of the division in 2013, had tripled to 34 trillion won at the end of June this year.